Rising prices and weight-loss drugs are changing the way we eat - and food companies are racing to keep up

MW Rising prices and weight-loss drugs are changing the way we eat - and food companies are racing to keep up

By Claudia Assis

2025 was 'one of the toughest' years in decades for retailers of consumer staples, including food and beverages

A shaky economy, wider adoption of weight-loss medication, and changing tastes seem to conspire against some food makers.

A strained economy, the growing number of people on weight-loss drugs and changes to government food-assistance programs are some of the looming challenges for food producers in the new year.

Makers of so-called "center aisle" foods, usually processed and ultra-processed foods such as snacks, are already facing difficulties brought by changing consumer preferences. A reluctant consumer is another concern.

Kroger $(KR)$ and Dollar General $(DG)$ are among the companies noticing recent changes in consumer behavior.

Kroger executives said earlier this month that people are becoming "more selective" when visiting their stores, buying more on promotion and cutting down on buying general merchandise.

Dollar General also in December highlighted the fact that it is seeing some customers visit its stores more often, but spending less overall as they seek to stretch their dollars.

And people increasingly are choosing to shop at both ends of the grocery store, looking for fresh food usually located there, analysts at Jefferies said in a recent note.

"We anticipate food-sector headwinds will persist into 2026, as pressured consumers (notably lower-income), GLP-1 pill adoption and SNAP eligibility changes weigh on demand, particularly for traditional center-store offerings," they said.

The State Street Consumer Staples Select Sector SPDR ETF XLP has lost 0.9% in 2025 through Monday, while the S&P 500 index SPX has advanced 17%.

There's potential, however, for some upside in the second half of the year, past "peak" GLP-1 pill market fears, they said.

Those fears may have been escalated after Novo Nordisk's (NVO) (DK:NOVO.B) once-daily Wegovy pills were approved by the U.S. Food and Drug Administration, with plans for sales to begin in early January. And Wall Street widely expects Eli Lilly's $(LLY)$ oral GLP-1 medicine, orforglipron, to be approved in the first quarter of 2026.

See more: Eli Lilly, Novo Nordisk file competing new weight-loss drugs with the FDA that could be game changers in obesity medicine

"We expect the GLP-1 headlines to return in fury in 2026" due to the new oral versions, which could increase adoption, and the Trump administration's intention to drive higher usage of such medications through cutting their price, RBC analyst Nik Modi said in a recent note.

Modi, who looks at food and beverage companies as well as others in the consumer-staples category, said that this year has been "one of the toughest we can remember in our 25 years covering" the sector.

For the next year, "things could get worse before they get better, given changes to SNAP benefits, some wobbling in the labor market and general anxiety over AI (and its impact on job security)," Modi said.

Earlier this month, the USDA approved six new state waivers under the Make America Healthy Again initiative, allowing SNAP to restrict buying certain foods deemed unhealthy, such as sugary drinks.

There are also expectations of eligibility changes following the Trump administration's unproven claims of widespread fraud in the program, which provides food to lower-income Americans and was once known as the food-stamp program.

In a recent report, marketing research firm Circana said that U.S. food shoppers are seeking value, and also singled out fresh-food categories as the ones poised for higher demand, "driven by healthy living trends and increased attention to product ingredients, as well as the growing influence of weight-loss drugs."

Also read: Tariffs and GLP-1s are keeping people from dining out. An analyst tries to find the positives.

On the plus side, "the food and beverage sector continues to demonstrate resilience and adaptability," Circana said. Brands and retailers that prioritize affordability, sales flexibility and personalized marketing approaches will be best positioned to succeed in 2026's competitive landscape, it said.

-Claudia Assis

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December 23, 2025 07:05 ET (12:05 GMT)

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